Thomson Reuters and IdealRatings on Sunday announced the launch of Thomson Reuters IdealRatings Islamic Indices, the first Islamic benchmarks to offer research-based Shariah screening based on a globally accepted Shariah standard to investors, money managers and analysts across a range of Islamic instruments, resulting in the most transparent Islamic guidelines for investors in the UAE, Middle East and around the world.
The new family of indices includes compliant companies in over 60 countries and covers the global equity markets in nine regions including the Gulf Cooperation Council (GCC) and Middle East and North Africa (MENA) in addition to individual country indices and sectors such as Global Technology, Healthcare, and Energy. Companies represented in the indices include GCC companies such as Aramex, Dana Gas, Deyaar Development and Zain Group as well as global corporations Exxon, Microsoft, Google and Novartis. All of the indices comply with the relevant provisions of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
“The industry is looking towards so called ‘Islamic Indexing 2.0’ and Thomson Reuters is pleased to be working with IdealRatings to lead the market with these first of its kind Islamic indices using research-based rather than automatic screening and our unique global sector standards,” said Rushdi Siddiqui, Global Head of Islamic Finance, Thomson Reuters. “With the industry seeing double digit growth annually, Thomson Reuters robust Islamic finance offerings are creating the foundation for the continued development of the rapidly evolving global Islamic finance community and Islamic equity capital markets.”
Thomson Reuters IdealRatings Islamic Indices research-based screening approach guarantees the most recent Shariah-compliant status by reviewing the index on a quarterly basis to ensure they meet relevant sector, financial and general considerations. Proprietary algorithms scour all public information and news about a given company to determine whether specific company revenue should be screened further for non-compliance while a dedicated team of researchers scrutinizes algorithm outputs for accuracy checks and analyzes company financials and lines of business. Over 30 revenue streams of interest to Shariah compliance are tracked for each company.
The indices are the only Islamic indices available that utilize the proprietary Thomson Reuters Business Classification (TRBC), the industry’s broadest classification system covering 71,000 public companies worldwide. The classification tracks 124 industries subdivided into 52 industry groups, 25 business sectors and 10 economic sectors on a global or regional basis. TRBC was recently recognized by the Journal of Indexes as the most useful industry classification scheme for ETF investors.
“The Thomson Reuters IdealRatings Islamic Indices build upon both Thomson Reuters and IdealRatings commitment to serving the Islamic Finance community while leveraging Thomson Reuters global coverage and years of index experience to provide the deepest insight into the Islamic finance market available through our proprietary sector classification. The launch of these new indices represents our ability to create unique opportunities for investors to access asset classes and themes beyond the conventional equity markets,” Sunand Menon, Managing Director, Thomson Reuters Indices, said.
“The combination of Thomson Reuters global indexing expertise and IdealRatings rigorous research-based screening methodology, proprietary algorithms and a globally accepted Shariah standard results in an Islamic Finance product the market demanded but was unavailable until now,” Mohammed Donia, CEO of IdealRatings, added.